2011 (4) TMI 633

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....e appeals.   2. Heard both sides.   3. The relevant facts of the case, in brief, are that respondents, M/s. Prabhu Lala Ram Ratan Das (P) Ltd. are engaged in the manufacture of branded chewing tobacco and other respondents are directors of the said company. The officers visited factory premises, godown and office of the respondents, on 1.6.2007 and found as per records of the raw material stock was 1,13,177.300 kgs of raw tobacco whereas on physical verification the stock available was 65,815 kgs of raw tobacco and also 37,562 kgs of semi processed chewing tobacco. Thus, there was a shortage of 10,400 kgs of raw tobacco. Shri Vijay Kumar Gupta, Director in his statement on 1.6.2007 stated that the said shortage was due to dr....

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.... have categorically explained the reasons of shortage of raw tobacco, and have denied the departmental allegations of unaccounted manufacturing and clandestine clearance of the finished goods; and no discrepancy was noticed in the stock of finished goods found available in the unit; in absence of any thorough investigation and positive evidences, the benefit of doubt goes to the appellants, and the demand cannot be sustained on the ground of presumption. The whole case of the department is based on presumption, which cannot take the place of proof which is a well settled legal position.   After viewing the circumstances of the case in totality, I am of the opinion that on the basis of shortage in the stock of principal raw material,....

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.... than 3% considering that about 4 lakhs kgs of production was recorded during the year 2007-08. No shortage of other raw materials has been found. Serious allegation of suppression of production and clandestine removal has been made on the basis of presumption and assumption. Mere payment of duty at the instance of department cannot bar them for seeking remedy before the adjudicating authority and appellate authority. She relies on the decision of the Hon ble High Court of Punjab and Haryana High Court in the case of CCE, Chandigarh vs. Nachiketa Paper Ltd. reported in 2008 (225) ELT 194 (P & H) in support of her contention that the demand of duty on presumption and assumption that the raw material found short must have been used in the man....